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Their Deal Is Meals on Wheels

A recent award from the U. of C. business school will help the dot-commers behind GrubHub expand their growing market share even further.

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Mike Evans and Matt Maloney made their final pitch to a panel of 19 judges in late May. The 29- and 30-year-old computer science MAs and founders of GrubHub.com, a restaurant delivery site, did their best to present themselves as entrepreneurs. "We tried to stay away from the phrase 'We're making this up as we go along,'" Evans says.

"We're sitting up there in front of 300 people who really understand this stuff," Maloney says.

"It was very intimidating," Evans adds. "We got through that with a lot of practice."

"And we had pretty suits on," says Maloney.

Whatever they did, it worked. GrubHub.com is a cowinner of the 2006 Edward L. Kaplan New Venture Challenge, an annual competition hosted by the University of Chicago Graduate School of Business. (The other winner is Chicago-based Collectica.com, a site that allows collectors of various sorts to display items online.) Now in its tenth year, the competition has spawned more than 20 companies, among them local minichain Bobtail Soda Fountain and the SAT tutoring site PrepMe.com. Over seven months, the entrepreneurial teams form, create business plans, and defend their proposals in two rounds of competition. This year's challenge began with about 60 teams, nine of which made it to the May finals. With their business already started, Maloney and Evans had a leg up. They plan to use their $25,000 in prize money to continue expanding GrubHub to other cities. They've already added San Francisco, New York, and Milwaukee; Seattle, Boston, Houston, and Washington, D.C., are slated for the fall.

The two met when they worked together first at Apartments.com and then at Homescape.com, where Maloney was a project manager and Evans a project developer. They kicked around the idea of a site that would hook up users with restaurants offering delivery. They started work on it in early 2003, and GrubHub debuted that fall, initially charging restaurants a monthly fee to be listed on the site. For several months it got few hits and little attention. Potential users may have been turned off by having to click haphazardly on a map rather than type in their street address. But after a redesign in 2005, GrubHub's usability started to improve. Now users can type in a specific address or click on a Google map, and the number of restaurants listed has grown from about 200 to more than 1,300. Since the redesign, traffic on the site has gone up an average of 15 percent a month.

"I'm really proud of this system," Evans says of the current site. "You can customize it completely." After typing in an address, users can sort restaurants by cuisine and see at a glance when they're open for delivery. If a restaurant offers online ordering, you can detail your order down to the condiments. There's also a field for food or delivery notes like "Hold the peppers" or "Take the elevator to the third floor." GrubHub confirms your order and e-mails you an estimated delivery time. If the restaurant doesn't offer online ordering, the site lists the restaurant's number so you can phone your own order in.

Restaurants now can have their menus, hours, and contact information posted on GrubHub for free, but if they want to receive priority ranking in search results, post coupons, and allow users to place orders online, there's a flat per-order fee (Evans and Mahoney won't disclose the amount). Maloney and Evans compile and post the basic restaurant data for a city first, then try to convince owners to pay to upgrade their entries. They estimate about 10 percent of the Chicago restaurants on the site have ponied up so far.

GrubHub's office, near the intersection of Belmont, Lincoln, and Ashland, is crammed with desks, a navy blue futon, and a sign reading "Big Money No Whammies!" When there aren't enough workspaces to go around, someone sits on the futon with a laptop. Six employees man the phones.

How does online ordering play out in practice? "I've used the order-online thing for Chen's," says local blogger Claire Zulkey. "It worked fine, although I thought when I used it, 'How freaking antisocial do you have to be to do this?'" The Fireside restaurant in Ravenswood has been using GrubHub for about a year and signed up for the online ordering feature a couple of months ago. Manager Liz Gray says she's seen a boom in online ordering in general. "It's easier--you don't have to wait, you don't have to talk to anyone, you don't have to be put on hold. We get calls through GrubHub all the time." I had no trouble using GrubHub to order from the Fireside myself, though after placing my order at 6:15 PM I was startled to get an estimated delivery time of 7:35. (The food showed at 7:10.)

About $2 million worth of orders were placed through the site last year, and Maloney and Evans project that 2 percent of all Chicago deliveries will go through GrubHub this winter. "Two percent of the orders is pretty freaking good for five desks on Belmont," Maloney says. About a month ago he quit Homescape.com to devote all his time to GrubHub--he'd been planning to do it even before they won the award, but the money makes it easier. Evans has worked on the project full-time since April 2004.

When setting up GrubHub.com, Evans and Maloney personally called thousands of restaurants throughout the Chicago area, from the city itself to the North Shore to Schaumburg to Downers Grove. "We expect other people to try to steal our data, but we don't expect them to try to compile it," Evans says. "It takes a certain OCD devotion. We're a couple of geeks who turned into businessmen. Well, I guess time will tell if we're businessmen."

Art accompanying story in printed newspaper (not available in this archive): photo/Robert Drea.

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